Top Management Message
To Our Shareholders (From CEO & COO)
Expanding the Game Market through Platform Diversification
In 2011, the global economy once again showed signs of deceleration. In addition to the dampening effects of economic stimulus in developed nations and the European financial crisis, surging prices in developing economies and continued tight monetary policy softened domestic demand. In Japan, despite signs of recovery on the heels of a depreciating yen and a rise in stock prices near fiscal year-end, the export environment continued to deteriorate from the sharp rise in the value of the yen and a temporary lull prevailed over the economy due to falling stock prices.
In our industry, with the rise of mobile and smart phones, the game platform is expanding; online businesses such as PC online and downloadable content (DLC), including low-priced mobile content with low barriers to entry, continue to rise. Consequently, the size of the game market continued to grow robustly, reaching 52.9 billion dollars in 2011 (up 19.1% from the previous year). Core users of home video games are predominately located in Japan, North American and Europe, while mobile content is centered on casual users from over 100 different countries across the globe. Investors are concerned about cannibalization, but there is none; these coexist as platforms and are growing. As the game population expands in accordance with the spread of mobile contents and social games, there is strong potential for benefit when this content functions as a bridge to home video games.
Accordingly, to increase market share in the global game market, Capcom will (1) increase the number of online business titles with high growth potential, (2) allocate management resources (development staff) to home video games, which comprise half the market despite sluggish growth rates (3) and, more than anything, create an extensive collection of popular contents to capture a wide user segment around the world.
Providing High-Quality Content for All Platforms
Given these conditions, to meet our medium-term business goals, we are promoting three strategies: "strengthen the online business", "enhance the development of home video games" and "expand Single Content Multiple Usage".
Above all, we are engaged in increasing the number of social games for mobile/PC, enhancing home video game DLC, developing online business by region and strengthening development teams. Also, in terms of organizational structure, we integrated our global organizational function, unified the vertically divided consumer, mobile and PC online development structures and changed to a new multi-platform development structure to support all hardware. And, we added world famous content such as "Resident Evil" and "Street Fighter" to each platform. As a result, this year sales of online content were 15,700 million yen (up 21.7% from the previous year) and we forecast sales of 23,000 million yen in the next fiscal year, a dramatic increase of 46.5% on the realization of our growth strategy.
To accomplish our medium-term management targets of (1) operating margin of 15% or higher and (2) net sales of 500,000 million yen and operating income of 75,000 million yen (cumulative total for five years from the year ended March 2011 through the year ending March 2015), Capcom will invest 90% of its management resources into growth strategies.
On the following pages, we provide details useful for analysis by shareholders and investors. CEO Kenzo Tsujimoto will explain management policy, and COO Haruhiro Tsujimoto will explain business strategy.